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UAW trust demands Fiat pay $342 million for Chrysler stake

DETROIT (Reuters) - Fiat must pay at least $342 million for a 3.3 percent stake in automaker Chrysler Group LLC that is held by a union-related trust, the trust claimed in court documents filed on Monday.

The UAW health care trust said Fiat's offer of $139.7 million for the Chrysler stake was substantially below the fair market value, according to documents filed in Delaware's Court of Chancery.

Fiat, Chrysler's majority owner, sued the UAW trust in September for failing to sell the stake.

As part of the 2009 agreement with the U.S. Treasury as Chrysler emerged from bankruptcy, Fiat is able to exercise call options to purchase portions of the stake held by the health care trust.

Re: UAW trust demands Fiat pay $342 million for Chrysler stake

Every article of Fiat lately seems to all say how they want to buy something at a massive discount to what is considered fair value, are they just arrogant enough to think they deserve to pay less because they helped Chrysler survive? Or they just trying to get the best deal for them?

Re: UAW trust demands Fiat pay $342 million for Chrysler stake

I simply believe they have a different definition of fair value. I don't know if there are any other buyers, and I believe Chrysler is not publicly traded. If so, the shares are worth as much as Chrysler is willing to buy at.

Re: UAW trust demands Fiat pay $342 million for Chrysler stake

The option buy price was pre-negotiated back in 2009. Now that conditions have chaged VEBA wants more. I can understand that. But it may be a Phyric Victory should they win. In today's circumstances Fiat will just not exercise the option, if the Price (revised) is too high. It would more than likely allow VEBA to go public with its Chrysler shares, while bearing the cost of doing so.

In such an event, the market would set the price, while Fiat has the voting power to control Chrysler utterly. It is highly doubtful in the depressed stock market facing us in recessionary 2013-14, VEBA would improve its situation at all. Selling all its shares privately would not help either. Especially if Fiat voted to deny issuing dividends, and simply increased Chysler's net worth and liquidity with retained earnings prudently, during the coming hard times.

Re: UAW trust demands Fiat pay $342 million for Chrysler stake

Originally Posted by staspeterson

The option buy price was pre-negotiated back in 2009. Now that conditions have chaged VEBA wants more. I can understand that. But it may be a Phyric Victory should they win. In today's circumstances Fiat will just not exercise the option, if the Price (revised) is too high. It would more than likely allow VEBA to go public with its Chrysler shares, while bearing the cost of doing so.

In such an event, the market would set the price, while Fiat has the voting power to control Chrysler utterly. It is highly doubtful in the depressed stock market facing us in recessionary 2013-14, VEBA would improve its situation at all. Selling all its shares privately would not help either. Especially if Fiat voted to deny issuing dividends, and simply increased Chysler's net worth and liquidity with retained earnings prudently, during the coming hard times.

I agree and would add also that VEBA is running short of money since a long time ad its situation is worsenimg day after day.

That said, we must consider that now as now Fiat's situation isn't going too well, and this is a point in favor of the Italian carmaker, vs VEBA.
But Fiat doesn't need to loan money, since it's been provident in the past years for getting loans at rates lower than actuals...

Thus, VEBA needs money and FIAT doesn't. Another point in favor of Fiat.

Third, should Fiat be forced to go public for VEBA stake, the actual moment is really not the best one for the trust fund, but the contrary, as already said by stas.

So, it's evident that Fiat has more cards to play than Veba, And by 2015/15 we'll see anyhow a full merger of a wealthy Fiat with Chrysler. Marchionne is non an engineer, he's a lawyer and an economist.

Re: UAW trust demands Fiat pay $342 million for Chrysler stake

I hate extrotionists...

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